Jan. 4 (Bloomberg) -- What’s the biggest financial decision
facing Europe in 2011? Easy. The choice of a new president at
the European Central Bank.

When Jean-Claude Trichet steps down from the post in
October, the leading candidates to succeed him will be
Bundesbank President Axel Weber and the governor of the Bank of
Italy, Mario Draghi.

Neither is the right man. Weber would be intolerable to the
peripheral euro countries, while Draghi might well provoke the
Germans into quitting the single currency.

For the leaders of the euro area, there are only three
solutions to this fix. They could take the traditional way out
of a difficult decision and give the job to an obscure Dutchman,
which is what they did when Wim Duisenberg became the first ECB
president. They could extend Trichet’s term to steer the euro
through an emergency. Or they could choose a wild-card candidate.

Most big European jobs are grand titles without much power.
The national leaders, such as German Chancellor Angela Merkel,
French President Nicolas Sarkozy and U.K. Prime Minister David
Cameron, make the real decisions.

Job With Clout

But the ECB president is different. He is the key economic
policy maker for the 17 countries sharing the single currency.
Within the euro area, the national central banks have little
genuine influence left. Along with the Federal Reserve chairman,
he is one of the two most important monetary officials in the
world. It is a job with real clout.

This year, it is even more important. With both Greece and
Ireland bust, it is no exaggeration to say the euro is in mortal
danger. Its survival depends on decisions made in the next few
years. There is a lot resting on the shoulders of the person
installed in the ECB’s headquarters in Frankfurt.

The trouble is, neither of the two leading candidates is
suitable. That isn’t because of who they are. Both Weber and
Draghi are clever, well-qualified men. Normally, they could do a
good job. But not this year. Why? Because of their nationalities.

Draghi has impressed the markets during his spell at the
Bank of Italy. But imagine the impact an Italian at the ECB
would have on German public opinion, which has already soured
regarding the euro. Putting an Italian in charge would confirm
all the worst German fears. He would be seen as the candidate of
the highly indebted countries. His appointment may convince
ordinary Germans that the euro wasn’t for them, prompting the
country to quit. Austria and the Netherlands would follow suit.

Hard Money

Bundesbank President Weber would be just as provocative to
the peripheral nations. He would be seen as the hard-money,
austerity candidate. His appointment could force Portugal or
Greece to quit -- with Spain and Italy next in line. If three or
four countries were to leave, there wouldn’t be much point in
continuing with Europe’s monetary experiment.

So what’s the solution?

There are three possibilities.

One, just do what the European Union usually does when it
can’t agree on who should get a big job: Take the obscure-Dutchman option. This time, give it to some little-known figure
from one of the minor countries. Austria’s central-bank governor,
Ewald Nowotny, has been mentioned as a possibility. So have
Finland’s Erkki Liikanen and Belgium’s Guy Quaden. All of them
would be safe choices, largely because few people have ever
heard of them. Whether they have the high-level experience to do
the job is another matter.

Safe Hands

Alternatively, extend Trichet’s term, even if it means
changing the rules on renewing his eight-year tenure. He’s only
68, by no means an unreasonable age, and has handled the crisis
as well as anyone could be expected to. He could be presented as
a safe pair of hands to steer the currency through a dangerous
period. The only problem would be that it wouldn’t be a long-term solution.

Or, third, how about a wild-card choice?

Who says the ECB has to be run by one of the people in
charge of the national central banks? How about French Finance
Minister Christine Lagarde? She has already played a crucial
role in piecing together the rescue packages for Greece and
Ireland. This is going to be a largely political job for the
next few years. It is about selling bailout packages and
negotiating compromises. She’d be good at that.

Or perhaps Emilio Botin, the chairman of Banco Santander
SA? He is probably Europe’s most successful commercial banker,
having turned Santander into one of the world’s biggest lenders.
He steered it through the credit crunch largely unscathed. He
may be from an indebted nation, but his international experience
with bank mergers would stand him in good stead at the ECB.

There are arguments to be made for and against any of those
solutions. Maybe the wild-card suggestions aren’t serious. But
the point is this: The EU should go for anything other than the
current candidates. Surely any of the alternatives would be
better than a divisive new ECB president who would be deeply
unpopular in one half of the continent or the other -- and could
easily end up presiding over the currency’s dismemberment.

(Matthew Lynn is a Bloomberg News columnist and the author
of “Bust,” a book on the Greek debt crisis. The opinions
expressed are his own.)